September 06, 2011 at 10:43 AM EDT
Wescast Industries Inc. Enters Into Memorandum of Understanding for Acquisition of Wescast by Sichuan Bohong Industry Co., Ltd.

BRANTFORD, ONTARIO -- (Marketwire) -- 09/06/11 -- Wescast Industries Inc. (TSX: WCS.A) ("Wescast") today announced that, in connection with its previously-announced strategic alternatives review, Wescast has entered into a Memorandum of Understanding ("MOU") with Sichuan Bohong Industry Co., Ltd. ("Bohong") of China regarding a proposed transaction pursuant to which Bohong would acquire, by way of a plan of arrangement under the Business Corporations Act (Ontario), 100% of the issued and outstanding capital of Wescast at an expected price of approximately $13.60 per share in cash, based on (and subject to adjustment on account of changes to) Wescast's expected transaction expenses and currently outstanding shares and share-based payment obligations on a fully diluted basis (the "Acquisition"). The Acquisition would be subject to a number of closing conditions, including approval of Wescast's shareholders, the Ontario Superior Court of Justice and regulatory authorities of competent jurisdiction.

Bohong has advised Wescast that it has completed its due diligence and, as a sign of good faith to complete the Acquisition, has agreed to provide to Wescast a deposit of $2.0 million. In order to complete the Acquisition, Bohong has advised that it will need to obtain committed financing from the China Development Bank. The MOU contains an exclusivity period until December 30, 2011 for the purposes of Bohong obtaining such financing and the parties negotiating a definitive arrangement agreement. The exclusivity period could be extended by Bohong until January 31, 2011 upon payment of a second deposit of $5.0 million and until February 29, 2012 upon payment of a third deposit of $5.0 million for total deposits of up to $12.0 million. Wescast has agreed that it shall not enter into any agreement to effect an acquisition of all or a majority of the shares of Wescast with any person or entity other than Bohong during the exclusivity period subject to the exercise by the Wescast Board of Directors of its fiduciary duties to accept a bona fide superior offer. If the Wescast Board of Directors so exercises its fiduciary duties, then Wescast shall refund all deposits paid by Bohong under the MOU and pay to Bohong an amount of C$2 million or, if the second deposit is paid, C$4 million or, if the third deposit is paid, C$6 million for the reimbursement of Bohong's costs and expenses. The deposits are also refundable in certain other circumstances.

Mr. Jim Barton, Chairman of the Special Committee of the Board of Directors, said, "We are pleased to announce this MOU with Bohong. We believe this would be an attractive outcome for Wescast's shareholders. We will work diligently with Bohong towards entering into a definitive and binding arrangement agreement and completing the Acquisition."

"We are excited by the prospective combination of Bohong and Wescast for our customers and employees. We believe that the two companies are highly complementary in terms of products, services and operating values. In particular, we are excited by the potential to pursue future opportunities globally. This acquisition would accelerate some of the exciting new technology initiatives underway at Wescast." said Ed Frackowiak, Chairman and CEO.

Mr. Dong Ping, chairman and CEO of Bohong, said: "We believe Bohong and Wescast signing this MOU is a milestone event. Bohong intends to build on Wescast's long history and believes that this acquisition would assist Bohong and China's automobile industry to reach a new platform in servicing global customers."

There can be no assurances, at this time, that the parties will enter into a definitive and binding arrangement agreement providing for the Acquisition and/or that the Acquisition will occur. The entering into of any such definitive and binding agreement would be subject to, among other things, the approval of Wescast's Board of Directors.

About Bohong

Sichuan Bohong Industry (Group) Co., Ltd. ("Bohong") has provided Wescast with the following information.

Bohong Group, established in 1999, is a group of companies engaged in automobile 4S operations ("sales", "spare parts", "service", and "survey"), manufacturing, real estate and new energy. It has over 40 wholly-owned or holding subsidiaries.

Bohong owns Sichuan Haosheng Automobile Parts Manufacturing Co., Ltd., the foundries of which are located at Mianyang City, Sichuan Province of China. They are the core of Bohong's production base of casting and machining auto parts. Bohong has also set up an operations base in Chengdu, the capital of Sichuan Province and a strategic center in Beijing.

Bohong has received numerous awards and recognitions over the years including: "Mianyang Philanthropy Company", "Credible Company", "AAA Company of the Mianyang Branch of the Agricultural Bank of China and the Industrial and Commercial Bank of China" and "AA Company of the Mianyang Branch of the Industrial and Commercial Bank of China", "Five Star Company of 2009 Technological Achievement", "2009 Outstanding Private Company" and the "President Unit of the World Eminence Chinese Business Association". Bohong owns Sichuan Haosheng Automobile Parts Manufacturing Co., Ltd. Bohong has secured long-term supply or strategic agreements with several Global 500 companies.

About Wescast

Wescast Industries Inc. is the world's leading supplier of cast exhaust manifolds for passenger cars and light trucks. In addition to other products, Wescast designs, casts, machines and assembles exhaust system components, primarily exhaust manifolds, turbo charger housings and integrated turbomanifolds for automotive original equipment manufacturers ("OEMs") and Tier 1 customers for the car and light truck markets in North America, Europe, Asia, Africa, South America and Australia. Wescast employs approximately 2,000 people in 7 production facilities and 5 sales and design centres in Canada, Hungary, the United States, Germany, Japan and China. Wescast also has sales and technical design representation in the United Kingdom and France. Wescast is recognized worldwide for its quality products, innovative design solutions and highly committed workforce.

Learn more at www.wescast.com.

Forward Looking Statements

The contents of this news release contain statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking statements based on certain assumptions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements include the statements regarding the Acquisition, including Bohong's financing, the purchase price, the parties entering into a definitive and binding arrangement agreement and closing of the Acquisition, and may also include financial and other projections as well as statements regarding Wescast's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "estimate", "intend", "plan", "forecast", "project" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this news release are cautioned that such statements are only predictions, and that Wescast's actual future results or performance may be materially different.

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including our perception of historical trends, current conditions, expected future developments and Wescast's transaction expenses relating to the Acquisition as well as other factors we believe are appropriate in the circumstances.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties principally relate to the risks associated with the Acquisition, including the negotiation of a definitive and binding arrangement agreement, and the automotive industry and include, but are not limited to: the failure of the parties to enter into a definitive and binding arrangement agreement, Wescast's transaction expenses relating to the Acquisition could be greater than currently anticipated which could result in a downward adjustment to the purchase price per Wescast share, the failure of Bohong to obtain the necessary financing commitment and financing, the possibility that any conditions to closing of the Acquisition under any such agreement, including regulatory, shareholder and/or court approvals, may not be satisfied or waived, Bohong's deposit being refunded in certain circumstances, Wescast being required to reimburse Bohong's expenses if the Wescast Board exercises its fiduciary duties to accept a bona fide superior offer, our operating and/or financial performance, including the effect of new accounting standards on our reported financial results, fluctuations in interest rates, changes in consumer and business confidence levels, consumers' personal debt levels, vehicle prices, the extent and nature of purchasing or leasing incentive campaigns offered by automotive manufacturers, environmental emission regulations, fuel prices and availability, the continuation and extent of outsourcing by automotive manufacturers, changes in raw material and other input costs, our ability to continue to meet customer specifications relating to product performance, cost, quality, delivery and service, industry cyclicality or seasonality, trade and/or labour issues or disruptions, customer pricing pressures, pricing concessions and cost absorptions, actual levels of program production volumes by our customers compared to original expectations, including program cancellations or delays, price reduction pressures, dependence on certain engine programs and the market success and consumer acceptance of the vehicles into which such powertrain products are installed, our relationship with and dependence on certain customers, currency exposure, failures in implementing Wescast's strategy, technological developments by Wescast's competitors and customers, government and regulatory policies and changes in the competitive environment in which Wescast operates.

Wescast does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by law.

Contacts:
Wescast Industries Inc.
www.wescast.com

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